'Credit scoring' ban hurts clients, insurance exec says - CBC.ca

P.E.I. is looking at banning credit scores from home insurance consideration. (iStock)

Critics are speaking out against the P.E.I. government's plan to ban insurance companies from calibrating their rates to the credit scores of their clients.

In May, the provincial government passed legislation that will allow it to prevent insurance companies from using credit scores to issue home insurance quotes.

Some Island insurance companies say so-called credit scoring hurts some Islanders who do seasonal work.

But some companies that provide credit scores disagree.

Tom Higgins, vice president at Trans Union Canada, a credit-reporting agency, says a ban punishes people with good credit.

"From what we've seen with the insurance industry, they're saying anywhere from 60, maybe upwards of 70 per cent, of the people are receiving some sort of benefit or premium reduction because of their credit score," Higgins said.

"So potentially there's a large percentage of Islanders who would see their premiums increase because their score is no longer part of that equation."

He also says people should have the choice as to whether their credit score should be used when coming up with an insurance quote.

The provincial government's bill still needs regulations before it comes into effect.

Officials plan on bringing forward draft regulations to the public for input before implementing them, according to a spokesman for the province.